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Kesa mulls Comet sale without pension problem 26 September 2011

Turnaround specialists Hilco Consumer Capital and private equity firm OpCapital are believed to be in the running to buy some, or all, of the 240 branded stores, but with a pension scheme deficit of nearly £50m, sealing a straight-through deal has proven tricky.

Kesa is believed to have met with the Pensions Regulator where it has floated the idea of keeping the scheme, paying into it over the coming decade and selling the Comet business separately.

Anna Smee, director of business consultancy Hundred Consulting – which has worked with a variety of FTSE 100 retailers, said these negotiations show how times have changed in the private equity world.

She explained: “Historically, this (pension scheme deficit) would have been left as a concern from (the private equity firms) because financial markets were in better shape.”

Smee said this is unusual because it may reflect the fact that the two interested parties are not necessarily comfortable raising addition capital to cover the pension scheme deficit.

She added: “Back in the day private equity would buy a company, help the management team out, assist them with their planning and provide on-the-ground advice.

“Over time, they moved away from that, employed lots of investment bankers and focussed on raising funds. We are seeing the private equity firms move away from that and hire in people who are experienced in building up businesses instead.”

Related websites:

- KESA Electircals

- Comet



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